It is no secret that success in business is rarely left to chance.Â Luck plays a part, but sound decision making is always the card that makes any serious business prosper in the long run.Â Carefully laid plans are typically the foundation for the decisions that will make or break the organization.
While planning is very important, too many entrepreneurs get caught up in what is really only the first stage of the decision-making process.Â The truth is that excessive planning can be dangerous to businesses for a couple of reasons.Â The difference between accountants and entrepreneurs is that entrepreneurs can improvise when the plans they have prepared are not appropriate or a better opportunity passes their way.
While planning is the foundation to decision-making, resources must be allocated carefully between the preliminary and final decision-making stages.Â Businesses often make the mistake of spending so much time developing well refined plans that they have little to spare when the time comes to actually make their move.Â They also misjudge how long it can take to actually implement a decision.Â Implementing a decision can take sometimes take years while planning could take a couple of months.Â Sacrificing time that is available for making a decision can sometimes be the death of a business deal.
Another problem with planning too carefully is that it often causes entrepreneurs to become too dependent on an initially constructed framework for decision-making.Â First of all, every business is affected by new events and trends.Â Making a decision based on a plan that was made a year, a week or even an hour ago can be disastrous in many instances.
It is not always feasible to update plans continuously.Â When an entrepreneur faces a urgent situation or must make a decision following a sudden change of events, they must be willing to substitute their own judgment for the archaic plans they put together based on best case scenarios of times long past.
The question entrepreneurs must ask themselves is whether or not they are planners or doers.Â Ideally, they need to be both but true entrepreneurs will have a passion to move in and take action rather than sitting on the sidelines formulating a strategy.Â If they are smart, they will acknowledge that planning is necessary to achieving success in business.Â At the same time, if they are going to be successful they will be more focused on making sound decisions than crafting the plans that precede the decision.
Entrepreneurs have debated the issue of whether or not business plans are beneficial to their startup.Â The degree to which a business plan helps a new venture depends on the volatility of the environment that is founded in.Â While every business needs a business plan, businesses in high tech or other uncertain industries are going to have a hard time planning accurately.Â While these plans are a crucial overview for their primary strategies, nothing in the plan can be set in stone because new developments constantly change perspectives on what is realistic.Â At some point, the plan may need to be scrapped completely.
Running a business is all about making the right decisions with the right timing.Â Creating good plans is an important element of that process, but the best entrepreneurs understand that plans must factor in uncertainty and change if they are to be assets to the organization.
Kalen Smith is the founder of Engineer-a-Business, a provider of business-to-business services and informational products for developing technology businesses. Read more about Kalen here.